Samsung Group’s investment good signal for FDI

While Vietnam’s FDI attraction is becoming harder, the proposal of Samsung Group to invest $1.5 billion in an information technology complex (Samsung Complex) project in Bac Ninh province is seen as a positive signal, according to the Thoi Bao Kinh Te Viet Nam newspaper.
A source from Bac Ninh said that PMU of Bac Ninh industrial zones granted the modified investment certificate to Samsung Complex with special incentives.

This is the important basis for the investor to raise capital for the project from $670 million to $1.5 billion in the coming time. With this, Samsung becomes the leading investor in fields of electronics, electrical machinery in Vietnam.

The modified investment certificate rules that apart from the registered capital of $670 million, Samsung Complex will enjoy CIT of 10% in the entire lifespan of the project; CIT exemption in four years, 50% reduction in CIT in following 9 years (meaning 5% CIT only).

In addition, the investor will also enjoy import tariff exemption for all materialsl, accessories and support components (that cannot be produced domestically) to serve assembly and production of mobile phones within 5 years starting from April 2009.

The aforementioned incentives, despite they do not meet the investor’s proposal, still are high amount of money because revenues as well profit of the project is expected to be huge.

With the support of Ministry of Planning and Investment, Samsung gained approval of the government according to Decision No 49/2010/QD-TTg dated July 19, 2010 on high-tech portfolio (mobile phone, telecom and electronic devices) subject to investment and development priority.

While some electronic companies are shifting to import goods for commercial purpose, Samsung’s production expansion should be enoucraged, an official from the ministry said.

Furthermore, Samsung has attracted 30 sattelite investors with total sum of $250 million in Bac Ninh. The number of satellite investors is expected to be 200 in future.

In the resport Samsung sent to the state authorities of Vietnam, the investor confirmed to disburse entire initial capital amount of $670 million from 2013 to 2015, and then raise to $1.5 billion in 2015-2020.

Samsung committed to increase the domestication ratio to 30-50% in 3-4 years from making products.

Being operational from late 2009, Samsung plant in the Yen Phong industrial zone of Bac Ninh province is operating effectively. By the year end, the plant is expected to reach the export turnover target of $3 billion.

If the investment expansion project becomes true, export turnover of the complex may reach $16 billion by 2015.

Tags: Samsung Group